Postal Service Losing $25 Million Daily with "Broken Business Model"

April 19, 2013

Postmaster General Patrick R. Donahoe told Congress recently that the U.S. Postal Service (USPS) could become "a significant burden to the taxpayer" if it does not get needed flexibility to change its business operations, says the Washington Post.

Appearing before a congressional hearing for the first time since the Postal Service had to back away from a plan to reduce delivery days from six to five, Donahoe told the House Oversight and Government Reform Committee that "the Postal Service is currently operating with a broken business model."

"We are losing $25 million dollars every day and we are on an unsustainable path," he added.

Donahoe said USPS needs the flexibility to implement five-day delivery, "to develop and price products quickly," "to control our health care and retirement costs," and "to switch to a defined contribution retirement system for new employees."

Donahoe also said the USPS needs to be allowed to "to quickly realign our mail processing, delivery and retail networks" and "to develop a more streamlined governance model."

He concluded that the Postal Service "need[s] more flexibility in the way we leverage our workforce."

Donahoe announced in February that a five-day delivery schedule would save $2 billion annually and would begin in August. He had to change course, he said, after congressional action "specifically designed to prevent the Postal Service from changing its delivery schedule. According to this law, we are now required to deliver mail as if it were the year 1983."

Though Donahoe's five-day plan was blocked, he views it as a delay, rather than a defeat.

"Our customers require certainty -- especially about something as fundamental as our delivery schedule," he said. "And so, we announced that we would delay implementation of our new schedule until we gained legislation giving us the ability to move forward."